Introduction to Mutual Funds

Introduction to Mutual Funds

Mutual fund is a hot topic always for people, but due to lucrative returns in the pandemic now everyone wants to understand it. “Mutual funds are subjected to market risk” this phrase surmounts our mind when we think of mutual funds. The reverberance of risk associated with mutual funds acts as a hurdle for investor to take the first step towards Mutual fund investments.  This risk factor over-shadows the benefits in lime light. With this blog I’am putting an effort to explain you what is mutual fund in simple language. I will explain you the benefits and cons of mutual funds and types of mutual fund. Here is the simplest guide to mutual funds. So let’s start learning.

What is Mutual Fund ?

Mutual means shared by two or more people. Fund stands for money collected. Mutual Fund is a pool of investment created by the mutual fund trust to be used for investing further in securities, bonds and debts etc. This investment is managed by experienced fund managers for getting maximum benefits in the form of incomes. This benefit or income from the fund, so invested by the Assets Management Company are distributed among the investors in the form of returns.

Why to go for Mutual Funds ?

We do investment in different assets & securities. Investment provides us an additional income and future security. Everyone tries to diversify their investment portfolio which involves investing in securities, shares, bonds and debentures. But if one wants to invest in securities, bonds and debts, they need to do lots of research to avoid loss and have desired returns. This involves a lot of skills and knowledge as well as time to time monitoring is necessary to avoid any uncertainty. Mutual fund Company does the same think on your behalf from the fund invested by you and others. As mutual funds are managed by experts you can relax and concentrate on your work and your funds will keep earning.

Terminologies

In order to understand Mutual Funds better lets understand the few terminologies and abbreviations most used in the mutual funds operation and mechanism.

1.   Sponsors – Mutual fund is formed in the form of Trust, established by Sponsors. Sponsors are like regulators of mutual funds. They appoint AMC for the management of Mutual Funds. The very well recognised mutual fund trust is UTI (Unit Trust of India). There may be one sponsor or one sponsor along with other corporates to form a mutual fund trust.

2.    AMC – Assets Management Company. This company manages the investment of the investor and invest this fund money in securities and bonds. Mutual fund is been formed by sponsors and they hire AMC’s to handle the investment of investors.  AMC do all the work to management the mutual fund like investment, marketing, accounting and other functions. They charge fees for their service from the investors. Example of AMC are SBI Mutual Fund, HDFC Mutual Fund.

3.    AUM – Asset under management. It is the total asset which the AMC manage for the mutual fund. The value of the securities, debts and bonds less the liabilities of the mutual fund is its AUM. 

4.    Fund Manager -  AMC allocated proper fund manager for a particular mutual fund to manage and plan its investment and evaluate its performance. Fund manger is the proper person who manages the portfolio of mutual fund scheme. For example – Mr. Prashant Jain is the Fund Manager of HDFC Balanced Advantage Fund.

5.   NAV – Net asset value. It is the market value of the securities held by the AMC under the respective scheme of mutual fund. It varies on day to day basis as the market fluctuates. But the NAV is same for a scheme throughout the day, as it is valued at the end of the trading day. For example HDFC Balanced Advantage Fund - Growth Plan - Direct Plan : NAV on 09/11/2021 : ₹ 303.8310.

Benefits of mutual funds

There are varies benefits of mutual funds. This is the reason now a days it the prime choice of investors.

1.   Professionally managed – Mutual funds are managed by fund managers. Fund managers are expert in their work and this provides the expert level performances to the mutual fund. Investor doesn’t have to personally get involved in the investment decisions.

2.  Tax Saving – ELSS (Equity linked saving scheme) is the type of mutual fund type which qualify for deduction under Sec. 80C of the Income Tax Act. Will discuss this in detail below.

3.   Liquidity – Mutual provides you easy entry and exit options. There are open end schemes which provide high liquidity.

4.   Generating Income & High Returns - Mutual fund can be used for a generating passive or additional income. Mutual may provide high returns as when the stock market is high the returns on mutual funds are high. Diversification – Investor can diversify his investment portfolio by investing in mutual funds. In place of personally investing in different assets or securities one can invest in mutual fund which has various securities in its scheme structure. Diversification helps to achieve a balanced investment and safe returns in future.

5.    Time Saving – A person can concentrate on his main business or profession and side by side invest in mutual funds to get an additional income as Mutual funds are managed by Fund Managers.

6.    Easy Accessibility – Now one can very easily invest in mutual funds either directly or through a distributor or discount agent.

If one has its advantage then will have disadvantage as well. Here are the disadvantages or some of the cons of mutual funds.

1. Greed - Mutual Funds are managed by people only and people have a psychological factor of greed. Mutual fund managers tries to get maximum investment from investors because in return of that investment they get fees. Sometimes they even compromise on the level of fund performance to get maximum investment for earning more fees. They do extra manipulative advertisement to entice investors.

2. Risk – “Mutual Funds are subjected to risk”. As they are based on share market securities and share market is volatile. The market goes up and down, the mutual fund returns also go up and down.

3. Investors sentimental effect - Share market is volatile. Its goes up and down from time to time. Many a times a down fall in Share market spread fear in investors and they start withdrawing from the mutual fund their Investments. This in turn makes the fund manager to withdraw or sale the investment of the Mutual fund. This lowers the value of mutual fund as a result the NAV of the mutual fund decreases.

Types of Mutual Funds

There are various types of mutual funds. They are categorised in four broad categories. 

I. Mutual fund based on fund scheme

II. Mutual fund based on investment objective

III. Based on asset invested

IV. Special funds


I. Mutual fund based on fund scheme.

There are basically two types of mutual funds based on fund scheme :-

(a) Close ended scheme

(b) Open ended scheme


(a) Close ended scheme

In this mutual fund scheme the maturity period of the mutual fund scheme is fixed. There is a well defined initial issue period within which you can purchase the units of the scheme. Once the issue period is closed, only the already issued units can be purchased or sold. Example - Reliance Close Ended Equity Fund - Series A – Growth, etc.

(b) Open ended scheme

In this mutual fund scheme the maturity period is not define. You can purchase the units of mutual funds at any time and sell it at any time. These are highly liquid Mutual Fund schemes. Example - SBI Small Cap Fund, etc.

II. Mutual fund based on investment objective

Every investor has a different investment objective; this mutual fund is based on the objective of the investor. Some investors want more growth on the other hand some investors want fixed income. There are basically of three types :-

(a) Growth funds

(b) Fixed income fund

(c) Balanced fund

(a) Growth funds

These scheme basically target long term growth. They are meant for long term investment. They are highly risk prone because they invest more and more on equities and market securities. Example – Axis Growth Opportunities Fund, etc.

(b) Fixed income fund

These mutual fund schemes provide regular returns for a period of time. They won't provide high returns as they have low risk. Example - Mirae Asset Short Term Fund, etc.

(C)Balanced fund

These mutual fund schemes provide your balance between risk and return. They provide a combination in there investment portfolio of equity and debt to get a stable income. The risk is lower as compared to growth funds but higher as compared to fix income funds. Example - DSP Equity & Bond Fund, etc.

III. Based on asset invested

Here the mutual funds are categorised on the basis of the securities in which they invest. Based on asset invested by mutual fund scheme there are three types of mutual funds :-

(a) Equity fund

(b) Debt fund

(c) Hybrid funds

(a) Equity fund

These funds majorly invest in stock or equities of companies. They can invest in Large cap, Mid Cap or small cap companies. They also invest in bluechip companies as well. They have high risk and provide high return. Example - Axis Small Cap Fund, etc. 

(b) Debt fund

These funds invest in debt market security. They provide Low Returns as compared to equity fund. They usually invest in government securities like Government Bonds, debentures, other government securities. Example - Axis Gilt Fund, etc.

(C) Hybrid funds

These Mutual Funds invest in both equity and debt. They create a combination of equity and debt, in some scheme debt portion is more as compared to equity and in some scheme equity portion is more. They are also called balanced fund. They are more risky then debt funds and less risky than equity funds. In the same way they provide more returns as compared to debt funds and less returns as compared to equity funds. Example - Axis Triple Advantage Fund, etc.

III. Special funds

These fund scheme invest in special kinds of asset as per the investment plan or purpose of the Mutual Fund scheme. They can be categorised in four types :-

(a) Index funds

(b) Sectoral funds

(c) Regional Funds

(d) Tax Saving Funds


(a)Index scheme

Index are market benchmark like Nifty 50 or Sensex. Index scheme invest in index stock. They are highly risky. Example - Tata Index Fund Sensex Direct Plan, etc.

(b) Sectoral funds

These mutual funds invest in specific sectors or industrial sector. Like some mutual funds invest in infrastructural companies and some in IT companies etc. Nippon India Pharma fund Direct Growth is a sectoral fund which invest in pharma companies etc.

(c) Regional funds

These mutual funds invest in specific geographical area. They basically invest in companies working or planning to start working in specific geographical area. These funds are mostly popular and operating in foreign countries. Example – Matthews Korea Fund, etc.

(d) Tax Saving Funds

These mutual funds investment are eligible for tax deduction under Section 80 C of the Income Tax Act. In these mutual funds scheme there is a lock in period which starts from three years. These are the most adored mutual fund scheme in India. ELSS (Equity linked saving scheme) are the tax saving funds. Example – JM Tax Gain Fund, etc.

I tried my best to explain you all about mutual funds. This is just the introduction and I will be coming up with specific blogs over it to share with you further details. If you have any comments and queries, feel free to share over the comment box below. The mutual funds mentioned above are just for education purpose and they are not in any manner a advice or recommendation.

Take care and god bless you all.

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Disclaimer :

The above blog is purely for educational and  guidance purpose. It's just the reflection of the author's personal experience and judgment. The author has just provided the general information & understanding and its not at all an alternative of any legal advice or practitioner. The content stated in the blog should be used by the reader at his own discretion and sole responsibility. The content of the blog can be only used for any other document, write-up, article, blog and any written or printed material whether on paper or digitally in any form, with the prior permission of the author.  

Flipkart Pay later - benefits, uses and activation

 

Flipkart Pay later : benefits, uses and activation process

Managing finances is a day to day activity now a day. As the inflation is rising worldwide, people are looking for alternative ways to plan their monthly bill payments. There is limit in everyone’s purchasing power but certain unalarmed needs knock everyone’s door now and then.

Diwali is at its arrival and we are all geared with our shopping list. Diwali is the biggest festival in India. Festival season is something which add lots of gifts to our shopping basket always and deep down in our minds everyone wants festivals to be full of gifts, sweets, new cloths and latest products. But the question is, “How to get the extra money to pay” or "Loan & credit to pay".

Look honestly not all of us have any access to any credit facility like short term loans, credit cards etc. And no want to bear the exhausting, complicated, time taking process of loan approval. Loan approval in itself requires a lot of paper work which is not a cup of tea for a common person like a student or a homemaker. In addition to this, short term loans and credit facilities (like Credit Cards) require paying charges and interests on regular basis.

So here I’am with an easy solution for all these issues. We are all now very much familiar with online shopping and e-commerce platforms. So why not to use these platform facilities to plan our finances. Flipkart  is out with a very useful feature of “Flipkart Pay Later”. Its quite old now but still, people are not much aware of it and its benefits.

Flipkart Pay later

Flipkart Pay Later is a kind of credit facility or loan facility offered by flipkart in association with IDFC First Bank, in which you can pay after the purchase of your product. The payment system is basically of two different types i.e. single payment in the subsequent month (Pay Next Month) or EMI payment. Flipkart Pay Later (EMI) is currently available for select products where transaction amount is greater than ₹ 2,500.

This facility can also be used with their partner platforms such as Myntra and 2GUD. Flipkart Pay Later (EMI) is not available on their partner platforms. But my main emphases is over  Pay Next Month because it does not charge any interest.

No interest, hidden Charges and processing fee

The best think about Flipkart Pay Later in that it won’t charge you any processing fee and interest for the facility. Flipkart Pay Later (EMI) does incorporate interest element in its EMI (every month installment) but in Pay Next Month there is no interest charged. There is a nominal usage fee of ₹10/- will be added to the customer’s dues if the credit usage for the month is higher than ₹1,000/-.

Benefits

1. Instant credit upto ₹ 70,000.
2. Few minutes application processing time.
3. No documentation i.e. e-KYC ( Electronic Know Your Customer)
4. Credit for a month without any charge (except ₹ 10) like annual maintenances, service charge, interest charge etc.
5. Affordable EMI without any loan approval or credit approval process.
6. Easy adjustment of refunds on cancellations from dues payable.
7. One bill payment of all purchases made last month or previous months. So individual record keeping.
8. Any time cancellation or surrender of the facility after payment of all dues.
9. 24*7 customer support.

Penalty

We talked about all the pros, now is the point to discuss the cons. As it is a financial credit or loan so conclusively in case of default, there will some penalty too. Penalty will be charges if you defaulted to pay or failed to pay the due amount or minimum amount due (partial payment). Penalty will be calculated on the outstanding dues (includes outstanding principal amount, interest or late payment panality) as on 5th of each month.

Bill Amount (in ₹)                     Late Payment Charge Amount (in ₹) 

100-500                                                60    

501-1000                                            125    

1001-2000                                          175

2001-4000                                          300

4001-5000                                          410

5000 & Above                                     600

Minimum amount due is the sum total of "10% of your Pay Later purchases" plus "Convenience fee for the partial payment option" plus "Any rolled over (or unpaid) amount from the previous month(s)" plus "Any late payment charges from the previous month(s)".

Convenience fee is calculated on the amount you carry forward to the next month.

Carry Forward amount to next month	Convenience Fee for Partial Payment	Late Payment Charges for payments after the due date
<= ₹ 500	₹ 60	₹ 60
₹ 501 - ₹ 1000	₹ 60	₹ 125
₹ 1001 - ₹ 2000	₹ 120	₹ 175
₹ 2001 - ₹ 4000	₹ 240	₹ 300
₹ 4001 - ₹ 5000	₹ 330	₹ 410
₹ 5000 & above	₹ 475	₹ 600

Note : all charges are inclusive of all taxes

How to Avail and due payments

One can activate Flipkart Pay Later by Aadhaar OTP-based e-KYC (Electronic Know your client) which is valid only for 12 months from the date of activating your Pay Later account.

For this you have of to visit the Flipkart Pay Later section under 'My Account' and refer to the ‘Pay Later’ section in the Flipkart mobile Application or website.

The due payments are to be done by the 5th of the subsequent month(s).

How to activate

It is a three stage process. First stage is the Pan Activation. Second stage is the Aadhaar OTP-based e-KYC. Last stage is the Bank confirmation.

Step 1 : In the Flipkart App or website. Login and go to Pay Later section under 'My Account'  or simply you can search Flipkart Pay Later over the search bar provided in the Flipkart App or website.

Step 2 : Enter your PAN (Permanent Account No). Click on “Activate Now” button.

Step 3 : Verify Aadhaar : Fill in your Aadhaar no and verify by the OTP received in the registered mobile with Aadhaar. Click on “Verify” button.

Step 4 : Fill in the OTP (one time password) in the pop up dialogue box.

Step 5 : Review and submit your application. Check your details, name, address etc.

Step 6 : Verify your Bank account by filing your UPI Id or Bank Details. Click on “Confirm and Submit” button.

Step 7 : Rupee one will be credited in your bank account linked with Aadhaar.

Step 8 : Your eligibility will be checked.

Step 9 : Now your will be informed about your credit limit for Flipkart Pay later (Pay Next Month).

There is also a offer on the first purchase by using Flipkart Pay Later, you can get 15% off subject to the maximum of ₹150/-.

If you want to see the complete process, then you can visit the my youtube link : https://youtu.be/FxYMP4onRek

For Flipkart Pay Later (EMI) your have to check on individual product eligible for it and then proceed. For more details you can visit Flipkart official website and mobile application. I hope this blog helps you out to finance your Diwali shopping plans. I tried best to provide you the best information.

Do follow,subscribe and like us at facebook, Instagram and youtube to keep getting such useful informations.

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Disclaimer :

The above blog is purely for educational and  guidance purpose. It's just the reflection of the author's personal experience and judgment. The author has just provided the general information & understanding and its not at all an alternative of any legal advice or practitioner. The content stated in the blog should be used by the reader at his own discretion and sole responsibility. The content of the blog can be only used for any other document, write-up, article, blog and any written or printed material whether on paper or digitally in any form, with the prior permission of the author.  

 

How to Check Income Tax Refund Status

Waiting is always tiring. In this covid pandemic scenario people are worried about there income tax refund a lot. As the refunds are coming at snail speed, the anxiety among assesee is increasing day by day. Many a times it is really annoying to call consultants and tax associates to asks for the refund update. I have been regularly receiving calls from people asking about there refund status for F.Y. 2019-20. With this blog I would like to share the process through which anybody can know about his income tax refund in a very simple and easy process. Will explain you the related facts and process in the most simplest way so that a common person can very easily understand.

Dear friends I try to provide you the best details and information, this require research and time. Your support and love provide me encouragement to keep on doing this. Please show your love and support by liking and sharing by blogs. Please don’t forget to follow my blog to so that we can stay connected.

If you wish to see the complete process of finding the income tax refund status with live example go to the video link :  https://youtu.be/n-_dWBgnOd0

What is Income Tax Refund ?

In simple words, Income tax is a statutory liability of the citizen of the country towards government for earning income, which accrue or arise by any source within the country. Against the income arising in the country the income earner (called as assessee) has to pay tax to the government.

“TDS” stands for tax deducted at source and “TCS” stands for tax collected at source.  As per respective provision of the Income Tax act, the payer of the income has to deduct tax from the earning of the payee on behalf of assesee (payee) and deposit it to the government in the form of TDS. TCS is a tax collected by the seller of specified commodities (specified in the Income Tax Act) and paid to the government. I will do come out with a separate blog over TDS and TCS very soon as it a huge topic to cover and explain.

The assessee whose income is subject to TDS and TCS, if does not have a taxable income files income tax return and claim the tax deducted for the financial year in return from the government.  This claiming of excess tax deducted from the income of the assessee in return is called as Income Tax Refund.

How to get Income Tax Refund ?

In order to get your income tax refund you have to file your income tax return for the financial year.

How to Check Income Tax Refund Status ?

After filing your income tax return when the refund is issued can be seen by tracking Income Tax Refund Status. You can do so by following the below simple process :-

Step 1 : Go to www.tin-nsdl.com

Step 2 : Service Menu

At the home page, go to the menu bar and click over “Services” menu.

Step 3 : Status of Tax Refunds Menu

From the Drop-down Menu, Select “Status of Tax Refunds” and wait for the next page to appear.

Step 4 : Status Tax Refund

From the page appearing on the screen. Go to “Status Tax Refunds” and click over “Refund Tracking”. And wait for the page to appear.

Step 5 : Refund Tracking

From the Refund Tracking screen. Go to Taxpayer Refund (PAN) and click over “Proceed”

As we are tracking our own refund status and we are tax payer that is why we are selecting the respective option. And additionally we are tracking our Refund on the basis of PAN (Permanent Account number) so it’s a PAN base search.

Step 6 : Fill in PAN no and Assessment Year

In the “Refund Tracking” screen, fill in your PAN no and Assessment Year. Assessment year should be the one for which you want to know the refund status.

Now, fill in the Captcha Code in the space provided. Fill the Captcha code same as it is shown at the time. Putin the no and alphabets as they are appearing, like be very careful about form of letter i.e. they are capital letter and small letter. As the Captcha code is case sensitive.

Click over “Proceed”

Step 7 : Status of Income Tax Refund

Your Status of Income Tax Refund will be shown. It will mention :

1. PAN – It will show your PAN.

2. Assessment Year - Assessment Year for which Income Tax Refund status is shown.

3. MODE of payment – It will show mode of payment :

        > Direct Credit – this means direct credit to your bank account linked with PAN.

        > NECS – National Electronic Clearing Services is electronic fund transfer.      

4. Reference no -  It the refund transaction reference no.

5. Status – This shows the exact status of refund with additional comments. It mostly have following comments :

I. Refund is already credited to your bank, please contact your bank

II. Account has been closed - Electronic credit rejected by the bank of the assessee as the account number provided to the ITD has been closed. Contact your assessing officer for change in account details and fresh release of refund

III. Account has been closed - Electronic credit rejected by the bank of the assessee as the account number provided to the ITD has been closed. Contact your assessing officer for change in account details and fresh release of refund

6. Account -  It is the account to which refund is transferred. This is the bank account linked with PAN and chosen for refund purpose (if more then one).

7. Date -  It is the date on which refund is provided to you. This will be the date of transfer of refund to your bank account.

This is how you can check your income tax refund status. Don’t forget to like, subscribe my blog. Do share with friends and family the useful information. 

Do follow,subscribe and like us at facebook, Instagram and youtube to keep getting such useful informations.

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Disclaimer :

The above blog is purely for educational and  guidance purpose. It's just the reflection of the author's personal experience and judgment. The author has just provided the general information & understanding and its not at all an alternative of any legal advice or practitioner. The content stated in the blog should be used by the reader at his own discretion and sole responsibility. The content of the blog can be only used for any other document, write-up, article, blog and any written or printed material whether on paper or digitally in any form, with the prior permission of the author.  

Micro, Small and Medium Enterprises (MSME) Registration and its Benefits

Micro, Small and Medium Enterprises (MSME) Registration and its Benefits

In this growing economy like india, there are ample opportunities for new enterprises and organisations to establish and grow. There is also a wide open market for Indian exporter and traders. Indian products and services have huge demand due to quality, price and high export standards.

The government has also taken its lead in the development, establishment and nurturing of budding entrepreneurs and young minds. MSME Certification is one of its initiative to provide support, opportunity and priority recognition to new work-force and business minds.

In this blog I will tell you in very simple and easy to undersand language about MSME (Micro, Small and Medium Enterprises), MSME Certificate Registration and MSME Benefits. But before stating anything, lets first know what is MSME.

What is MSME ?

As a part of Aatmanirbhar Bharat Abhiyaan announced by Respected Prime Minister Shri Narendra Modi ji on 12th May 2020, Finance Minister Nirmala Sitharaman on 13th May 2020 announced revisions in the definition of Micro Small and Medium Enterprises (MSME). Earlier, the MSMEs were defined on the basis of investments now will also include turnover of the company.

1. MSME categorization will be on the basis of investment and turnover together.

2. Now no more difference in classification of manufacturing and service enterprises. Both manufacturing and service enterprises will be under same class.

3.   Necessary amendment in the law will be bought soon.

Revised MSME Classification 

The revised classification of MSME (Micro small and Medium Enterprises) will be on the basis of Investment along with the Turnover of the concern. Now there will not be any distinction for the classification in between Manufacturing Concern and Service Provider Concerns. The classification is still in three (3) categories i.e. Micro, Small, Medium enterprises.

MICRO - A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 1 Crore and Turnover does not exceed Rs. 5 Crore;

SMALL - A small enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 Crore and Turnover does not exceed Rs. 50 Crore;

MEDIUM - A medium enterprise is an enterprise where the investment in equipment does not exceed Rs. 20 Crore and Turnover does not exceed Rs. 100 Crore;

Note : For reference, the Existing MSME Classification is also provided under strikeout fonts.

The Government of India (GOI) has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of Micro, Small and Medium Enterprises is as under :

Enterprises engaged in the manufacture or production, processing or preservation of goods as specified below :-
A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh;
A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore;
A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.

In case of the above enterprises, investment in plant and machinery is the original cost excluding land and building and the items specified by the Ministry of Small Scale Industries vide
its notification No.S.O.1722(E) dated October 5, 2006 .


Enterprises engaged in providing or rendering of services and whose investment in equipment (Original cost excluding land and building and furniture, fittings and other items not directly related to the service rendered or as may be notified under the MSMED Act, 2006 are specified below :-
A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakh;
A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore;
A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore.


Its sounds to be a little complicated, let us understand it with the help of this flow chart below :

The government is providing various assistance, facilities and training to MSME Units having "MSME Certificate" as registered with the Union Ministry of Micro, Small and Medium Enterprises. The Government of India (GOI), Union Ministry of Micro, Small and Medium Enterprises, Reserve Bank of India (RBI), SIDBI (Small Industrial Development Bank of India) and other statutory bodies by implying various policies and regulations are providing various benefits and support to MSMEs. The Government of India (GOI), Union Ministry of Micro, Small and Medium Enterprises, Reserve Bank of India (RBI) has implemented various regulations and governance policies for the banks and financial institutions to generate easy, lucid and rapid finance and other services for MSME. The Union Ministry of Micro, Small and Medium Enterprises has established various "Training Center" and "MSME Facilitation Centers" for people and enterprises having MSME registration in many cities as well as at district levels. These "Training Center" and "MSME Facilitation Centers" provide trainings and MSME Scheme related facilities to MSME's.

How to avail the benefits of MSME Registration ?

One need to register himself or his enterprises as "MSME" under the "Ministry of Micro, Small and Medium Enterprises". The registration for "MSME" can be obtained via any Professional Consultant very easily (like a Service Provider, CA Firm, CS Firm and Legal Professionals), you just need to provide them required documents and rest they will perform from their end. There are various categories of MSME under which registration certificate is issued, like C,D,E etc. These categories are provided by the department itself on the basis of the details provided at the time of registration and on the basis of other records likes past performance, investment, location etc.

But in order to avail the benefits there should have adequate knowledge, proper communication and timely action. For this follow the following steps :-

Step 1 : Get MSME Registration. One can get a MSME registration with the help of the Financial Consultant (like a Service Provider, CA Firm, CS Firm and Legal Professionals) providing this service or from the "MSME Facilitation Centers" of your area.

Step 2 : Visit SIDBI (Small Industries Development Bank of India), MSME Facilitated Centers under the aegis of Union Ministry of Micro, Small and Medium Enterprises or their website to know about the variour schemes running.

Step 3 :   1. Always avail any registration or loan facilities under MSME Categories.

             2. Do not forget to mention to the respective department or bank that, "YOU   HAVE MSME CERTIFICATE".

               3. At the time of paying any statutory due or fee always enquiry about MSME Concessions, waivers or benefits. Mention your MSME Registration and attach copy of your certificate if allowed.

  

Benefits of MSME Registration

There are many benefits of MSME Registration. In other words we can say that MSME Registration provides you the entitlement for MSME benefits. some of them are discussed below :

BENEFITS OF MSME

 

1. Providing Training

The Union Ministry of Micro, Small and Medium Enterprises has established various technology center and other training centers for providing tech training and other skill development training to people to generate employment and self employed entrepreneurs. These centers either by their own or through MOU (Memorandum of Undertaking) with Institutions, provide training to MSME Registered youth. Below news is the supporting for this imitative of a Tech Center under MSME. 

Source : The Times of India dt. 02/11/2019

 

2. Sectoral and Priority Financing 

There is special sectoral and priority financing to the MSME's. These loan are provided by SIDBI (Small Industrial Development Bank of India). Sectoral Financing means financing to the specific sector i.e. MSME sector enterprises.

3. Bank loan without collateral  

The Government of India (GOI) has assigned the Union Ministry of Micro, Small and Medium Enterprises and the SIDBI (Small Industrial Development Bank of India) to trigger this task. The Union Ministry of Micro, Small and Medium Enterprises and the SIDBI (Small Industrial Development Bank of India) established a Trust named "Credit Guarantee Fund Trust for Micro and small Enterprises (CGTMSE) specifically to implement credit guarantee fund scheme for the MSME's. Under this scheme loans are provided collateral Free.

4. Waiver of Stamp Duty

The state government as per their state policy (differ from state to state) has developed norms for MSME's to waive off the stamp duty payable by MSME units for any of their business related transactions like purchase of land etc. The stamp duty waiver starts from 25% (differ from state to state) of the actual chargeable duty. For availing the waiver one must have MSME Certificate.

5. Subsidy on Patent Registration

Subsidy is given to the MSME Enterprises for the patent registration by the Ministry of Micro, Small and Medium Enterprises. For this application is to be made to the respective ministry. The subsidy starts from 50%, subject to conditions.

6. Special Banking Facilities by Banks

The GOI and RBI has lain down varies norms, regulation and provisions over the banking & financial institutions for providing specific denomination & percentage of its financing capacity to MSME units. This helps MSME's to get better finance from various banks and financial institutions. And as the banks are mandate to comply with the norms to finance MSMEs, they robustly look for MSME to provide loan and financial services. MSME get low interest rate loans and charges waiver. The interest concession differ from bank to bank. Like MSME can avail a benefit of 1% reduction over the overdraft (differ from bank to bank).

 

7. Industrial Promotion Subsidy Eligibility  

MSME's are also eligible for Industrial Promotion Subsidy for Industrial Promotion as suggested by the Government.

8. Concessional Electricity Rate

There are various state government schemes under which, they provide electricity connection and supply to MSME at concessional charges and rates. It differs from state to state as per their policy. This concession is available to all the Enterprises that have the MSME Registration Certificate, by providing an application in the respective manner (As per scheme) to the Electricity Department/Board along with the copy of MSME Registration Certificate.

9. Income Tax Benefits

There are many exemptions, deductions and other benefits available to MSME Units. Presumptive basis of taxation (depending on eligibility) can be considered as one of it. Export without payment of GST by executing a LUT (letter of Undertaking) in Form GST RFD – 11 (Circular No. 40/14/2018-GST) online is very easily allowed to MSME Unit.

10. Export Support and Market Visibility

GOI (Government of India) has made Export registration easy. It also provides easy export facilities to MSME Unit. They provide subsidies, tax exemption, and technical support as well to MSME Units. GOI organizes several exchange programs, craft fairs, exhibitions, and trade-related events internationally for MSME Enterprises to get international clients and business.Below is a news exact from a website showing the same.

This is a all about MSME, MSME Registration and its benefits. These are a few amongst many. Any comment and suggestion is most welcome. Share with your friends and family. For any query or assistance, feel free to comment.

Disclaimer :

The above blog is purely for educational and  guidance purpose. It's just the reflection of the author's personal experience and judgment. The author has just provided the general information & understanding and its not at all an alternative of any legal advice or practitioner. It has no connection with the websites mentioned in its contents. The content stated in the blog should be used by the reader at his own discretion and sole responsibility. The content of the blog can be only used for any other document, write-up, article, blog and any written or printed material whether on paper or digitally in any form, with the prior permission of the author.